German Stocks Rise on China Stimulus Speculation

German stocks gained, after
yesterday slumping the most in seven weeks, on speculation China
will announce further stimulus measures and as Spain’s Cabinet
approved the country’s budget for 2013.

Bayer AG (BAYN) climbed 1.3 percent. Volkswagen AG (VOW) fell 2.1
percent after saying that some of its competitors risk going out
of business without financial aid from European governments.

The benchmark DAX Index (DAX) climbed 0.2 percent to 7,290.02 at
the close in Frankfurt, after earlier advancing as much as 0.7
percent. The equity benchmark has surged 14 percent this
quarter, erasing its 7.6 percent slide in the second quarter.
The gauge has rallied 22 percent from its low on June 5 as
European Central Bank policy makers agreed on an unlimited
asset-purchase program and the Federal Reserve announced a third
round of quantitative easing. The broader HDAX Index rose 0.3
percent today.

“The market is higher on speculations swirling that China
will announce a large stimulus package after China National Day
on Oct. 1,” said Stephane Ekolo, chief European strategist at
Market Securities in London.

China’s equity benchmark, the Shanghai Composite, rallied
as much as 3.2 percent after the Shanghai Securities News
reported speculation that the China Securities Regulatory
Commission would announce 10 market-stimulating measures.

The People’s Bank of China may cut interest rates or the
reserve-requirement ratio for lenders, according to an academic
adviser to the central bank. Chen Yulu added that reverse
repurchase operations remained the key monetary tool for now.

Spanish Protests

Spain’s Cabinet approved the budget for 2013, which will
focus on cuts rather than tax increases, Deputy Prime Minister
Soraya Saenz de Santamaria said today. Spain’s bond yields
surged yesterday amid speculation that the country’s government
will delay asking the European Union for further aid.

The Cabinet also approved a package of reforms that Economy
Minister Luis de Guindos had promised to introduce during a
meeting of euro-area finance ministers this month.

In the U.S., a report showed the world’s largest economy
grew in the second quarter less than previously forecast,
reflecting slower gains in consumer spending and farm
inventories.

The U.S. economy expanded at a 1.3 percent pace. The
revision, the third estimate for the quarter, compared with a
previous estimate of 1.7 percent and the Bloomberg survey’s
median forecast of 1.7 percent.

Competing Treatment

Bayer increased 1.3 percent to 68.40 euros, contributing
the most to an advance by a gauge of European chemical makers.
Pfizer Inc. and Bristol-Myers Squibb Co. may have to wait until
March to discover whether U.S. regulators will allow them to
sell a competing treatment to Bayer’s Xarelto pill. The two
U.S.-based companies said that the Food and Drug Administration
has set a date of March 17 to issue its decision.

Volkswagen’s preferred shares lost 2.1 percent to 143.30
euros. The world’s second-biggest automobile manufacturer said
that European car sales will fail to recover next year, while
pressure mounts to lower prices of vehicles.

Solarworld AG (SWV) soared 9.4 percent to 1.63 euros. Germany’s
biggest maker of solar panels rose following a report that Sharp
Corp. plans to reduce its production of solar equipment in the
U.S. and Europe. SMA Solar Technology AG (S92) surged 10 percent to
28.65 euros, its largest gain in two months.